Chartered Accountants Australia and New Zealand (CA ANZ) has welcomed moves towards a more flexible approach to remission of interest charged by the ATO on unpaid tax liabilities – known as General Interest Charge (GIC) remission.
The Inspector‑General of Taxation and Taxation Ombudsman’s latest report on the ATO’s management of GIC remission includes several recommendations, all accepted by the ATO, which CA ANZ believes will help reduce Australia’s growing stock of debt while providing relief for small businesses struggling with rising costs at the same time.
Currently, GIC continues to accrue during payment plans, sometimes compounding debt faster than repayments, creating stressful scenarios for well-meaning businesses struggling to stay afloat.
Following the Ombudsman’s report, the ATO has agreed to explore whether interest will be fully or partly waived for a set period at the start of a payment plan and to explore greater use of partial remission, giving taxpayers certainty and preventing interest from undermining their ability to repay tax debt.
“With economic conditions still challenging, small businesses need support to meet their tax debt obligations without being overwhelmed by compounding interest,” said CA ANZ Tax Leader Susan Franks.
“When interest accrues faster than repayments, businesses can feel like they’re running uphill – but when businesses can see a clear path to clearing their tax debt, they more readily engage in the process, comply and recover.
“That’s good for small business, good for the economy and good for long‑term revenue outcomes.
“Pausing or remitting interest in appropriate circumstances can also restore confidence and make repayment achievable.”
Collectible tax debt now sits at around $54 billion, with small businesses responsible for around two‑thirds of that amount. The GIC currently sits at 10.65% and is no longer tax‑deductible from 1 July 2025.
“The interest charge is set by legislation, but how it is remitted can determine whether a business can realistically clear its tax debt,” Ms Franks said.
“With the ATO managing tax debts, of which more than 600,000 of those are currently on formal payment plans, these changes could play a critical role in supporting taxpayers.”
About Chartered Accountants Australia and New Zealand
Chartered Accountants Australia and New Zealand represents more than 140,000 financial professionals, supporting them to make a difference to the businesses, organisations and communities in which they work and live. Chartered Accountants are known as Difference Makers. The depth and breadth of their expertise helps them to see the big picture and chart the best course of action.
www.charteredaccountantsanz.com
For more information contact:
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AUSTRALIA Owen Roberts, Public Affairs Specialist Australia M +61 422 644 847 |
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